1. City of Richmond, California RNCC Budget Presentation June 13, 2016

2. City Goals in Budget Initiatives 1.Build and maintain a minimum 10 percent unrestricted budget reserve 2.Create a budget structure where recurring revenues exceed recurring expenses 3.Repair and maintain the City’s roads by creating revenues in excess of that needed to maintain fund balance 4.Maintain City’s investments in parks, libraries, and other public buildings by setting aside monies for repairs as they are needed 5.Craft a compensation plan that is competitive but affordable 2

3. Issues in Achieving a Balanced Budget 1.City has little control over revenues 2.Reducing non-personnel costs is not sufficient 3.Reducing personnel costs:  Can lead to reductions in service  May require a meet and confer process with unions 4.Maintenance of City buildings, parks, and roads requires a capital infusion above-and-beyond current budgeted amounts 5.Revenue reductions are likely in next recession 6.Impact of “Richmond Kids First Initiative” could divert $4.5M of GF revenue by FY21 3

4. Eliminating the FY17 Budget Gap Expense/Revenue Opportunity Change in Net Revenue Service Impacts Move ancillary programs to non-General Fund sources $1.0 million None unless other funding not available Reduce Personnel Costs -Benefit Cost Sharing -Overtime -Eliminate Vacant Positions -Increase revenue recovery in development departments $5.0 million - Impact on employees - Service impacts from lower OT and fewer employees to provide services Non-Personnel Costs -Vehicle replacement reduction -Reduced contracts/prof. serv. -Increase Code Enforcement fines $3.0 million -Use of older vehicles -Loss of outside professional assistance -Potential service impacts in non-GF departments Use One-Time Money -Insurance Liability -Worker’s Comp. Liability $2.0 million - Reduced one-time money for road maintenance and budget reserve Total Cumulative Savings$11.0 million 4

5. Long-Term Budget Recommendations OpportunityBenefit Have employees pay portion of OPEB liabilities Creates ongoing source of revenue to help guarantee long-term retiree healthcare Allocate revenue above a 10% operating reserve to capital/maintenance costs Provides targeted funding for road, park, and building maintenance Utilize a percentage of property tax revenue from new development for road resurfacing Provides an ongoing benefit to existing City residents from new development Evaluate all structural budget changes (e.g., salary increases, new or expanded programs) in the City’s 5-year budget model Ensures program sustainability and allows City to avoid budget deficits that threaten critical programs 5

6. Conclusions Choices the City makes in FY17 are critical to ongoing fiscal sustainability of the City Definitive action is required by the Council in developing the FY17 budget this spring to reset the City’s baseline budget Cuts in spending are required to balance an $11M deficit Impacts to employees are unavoidable (cost-sharing and/or position reductions) Service levels may be reduced The City does not have sufficient reserves to fund the FY17 deficit, and using any reserves in FY17 will put the City in a precarious position in FY18 and beyond Future cost-of-living increases will depend on creating more budget room 6

7. Richmond Central Ave Project 155 Affordable Apartments Central Avenue & San Mateo Street

8. Nevin Homes Residential 289-Unit Affordable Apartments Twenty Three Nevin Avenue

9. Terminal I 334-Unit Residential Community – Dornan Drive & Brickyard Cove Road

10. Mayor’s Office Projects 2 nd St. Land Acquisition (Rails to Trails) Affordable Housing Strategy Document Beacon Programs Citizens for Action Network Home Front Festival Committee Mayor’s Community Fund North Richmond Annexation Open Data Initiative Pesticide Free City Symposium Rail~Volution Conference Resource Guides Richmond Food Census SunShot Competition Urban Garden Contest

11. 2016-17 Goals Update the Five-Year Strategic Business Plan 11

12. 2016-17 Goals Develop a City-wide targeted retail strategy including Hilltop and Downtown Develop a new San Francisco Business Times Richmond issue Increase the number of small business loans 12

13. 2016-17 Goals Develop, implement and provide oversight for various ECIA-funded projects Solar Programs Climate Action Plan Competitive Grant Program 13

14. 14 Implement energy efficiency and renewable programs 2016-17 Goals

15. Bring Ferry Service to Richmond in 2018 15

16. 16 Implement diversion programs such as recycling & food scrap programs 2016-17 Goals

17. General Fund Budget Summary 17 Original Projection – May 3, 2016: Total Revenues148,054,112 Total Expenses161,677,813 Net Surplus/(Deficit)(13,623,701) Additions/(Reductions): Vacancies eliminated(315,302) Subsidies reduced(1,087,015) Part-time temp reduced(1,297,943) Additional rental income revenue23,268 Department restructuring(835,418) Current Net Surplus/(Deficit)(10,111,291)

18. General Fund Budget Summary 18 Budget Projection – May 17, 2016: Total Revenues149,619,818 Total Expenses159,731,108 Net Surplus/(Deficit)(10,111,291) Additions/(Reductions): Vacancy savings500,000 Targeted operating savings500,000 Police sworn vacancy savings600,000 Police sworn overtime reduction300,000 Police professional services reduction200,000 Fire sworn overtime reduction200,000 Utilities reduction200,000 Miscellaneous operating reductions91,367 General liability and workers comp reductions2,197,442 Current Net Surplus/(Deficit)(5,322,482)

19. General Fund Budget Summary 19 Budget Projection – May 31, 2016: Total Revenues149,619,818 Total Expenses154,942,300 Net Surplus/(Deficit)(5,322,482) Additions/(Reductions): Eliminated subsidy to Housing Department233,058 Transfer in from Marina Fund86,778 Police part-time temp reduction25,681 Library positions funded by grants/ECIA214,388 Net Surplus/(Deficit)(4,762,577)

20. General Fund Budget Summary 20 Budget Projection – June 7, 2016: Total Revenues149,706,596 Total Expenses154,469,173 Net Surplus/(Deficit)(4,762,577) Recommended Reductions: City Council7,000 City Manager50,000 City Clerk84,375 City Attorney30,000 Finance3,000 Human Resources33,000 Police144,880 Office of Neighborhood Safety40,000 Infrastructure & Maintenance Operations290,000 Library130,000 Community Services100,000 Information Technology88,155 Capital Improvement Department150,186 Non-Departmental735,680 Total Reductions1,886,276 Current Net Surplus/(Deficit)(2,876,301)

21. One-Time Cash Events One-time cash events (not revenue): Repayment of Port loan Repayment of RHA loan One-time cash events (revenue): Sale of Surplus Property One-time cash events should not be used to balance the budget, but can be used to fund: Capital projects Additional street paving Reduction in unfunded OPEB liability Deferred Maintenance 21

22. THANK YOU & QUESTIONS 22